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State RPSs Central to Renewable Energy Growth

Alex Gilbert's picture

Alex is a cofounder of SparkLibrary, a platform desined to make energy research faster, better, and easier. At SparkLibrary, Alex handles product design and oversees policy and market analysis....

  • Member since 2018
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  • Feb 4, 2016


  1. State renewable portfolio standards (RPS) have proven essential in driving initial renewable energy growth in the United States.
  2. RPS-compliant energy in 2013 constituted almost 5% of total U.S. electricity, with much higher shares in some states.
  3. This energy has brought in billions in economic and environmental benefits with limited rate impacts, explaining the political strength of RPS policies.
  4. Although most RPS-compliant renewable to date is from wind energy, solar is increasingly becoming important.


Federal energy policy developments received a significant amount of attention in 2015 – most notably, the finalized Clean Power Plan and renewal of renewable energy tax credits dominated headlines. However, this focus on national issues tends to obscure critical actions at the local and state levels that are just as important for energy systems. One of the most important state-level policies, renewable portfolio standards, play essential, but not fully appreciated roles in complementing and enabling federal policy action.

Renewable portfolio standards (RPSs) are the most influential state-level policies for renewable energy development in the United States. Combined with federal tax incentives, state RPSs have driven wind generation from less than 0.4% of U.S. generation in 2004 to more than 4.4% in 2014 while boosting solar above 1% of total electricity in the U.S. in 2015 for the first time ever.

Despite broad recognition of their importance, the central role that state RPSs have played in getting renewable energy to the point it is today is often not fully appreciated. By understanding what state RPS policies have accomplished to date, we can better understand what they are likely to do in the next several years.

Renewable Standards: Politically Attractive Policies

While the first RPS was passed in Iowa in 1983, it was not until the late 1990’s and mid-2000’s that many states began to follow suit. These early policies often came in response to increasing concerns about energy security and environmental considerations specifically at the state level.

While the exact requirements vary by state, RPSs generally require that a certain percentage of state electricity retail sales come from renewable energy by a specified year. As of October 2015, 29 states have mandatory standards while an additional 8 states have voluntary goals.

Remarkably, renewable energy mandates are one of the most politically attractive energy policies at the state level. They have been enacted in states ranging from liberal California to moderate Ohio to conservative Texas.

States with Renewable Portfolio Standards

Map of states with RPS Policies

Source: LBNL

Note: This map does not reflect several recent policy changes increasing RPS requirements in CA, NY, HI, and VT

Critically, state RPS mandates are generally non-partisan. Despite recent legislative attempts in some states to remove RPS goals, they have proven surprisingly resilient. With only a handful of exceptions, the vast majority of revisions to renewable mandates have led to more stringent renewable requirements. Public opinion polls show consistent support for efforts to increase wind and solar generation, making RPS policies popular for state governors and legislatures.

State Renewable Policies Key to Renewable Growth of the Last Decade

These widespread policies have had a tremendous impact on renewable energy growth.

Data from the Lawrence Berkeley National Laboratory (LBNL) indicates that, in 2013, at least 171,950 GWh of renewable energy was used to comply with state renewable mandates. This nearly equals 5% of total U.S. energy generation in 2013.

LBNL’s estimates are based on RPS compliance filings at the state level, meaning they have a high level of reliability. By tracking the retirement of renewable energy credits (great primer here), we can accurately gauge how much renewable energy has been used to comply with state mandates.

RPS-Compliant Renewable Energy Generation in the United States

RPS-Compliant renewable generation matches growth in wind

Source: Spark Library, based on data from LBNL and U.S. EIA

Critically, RPS compliance to date has been heavily concentrated geographically.

In 2013, almost 27% of RPS compliant generation came from California alone (where it made up almost 18% of total retail sales). Texas, New Jersey, New York, and Pennsylvania combined made up another 26%. Hence, the remaining 24 states with mandatory RPSs contributed less than half of RPS-compliant renewable energy in 2013.

This is partially due to California and the other states’ being large electricity consumers. However, it is also a timing issue – California, Texas, New Jersey, and Pennsylvania were some of the first states to enact RPS mandates. RPS requirements in other states are still ramping up, meaning that renewable generation is likely to become somewhat less geographically concentrated in the next decade.

Wind Dominates Historical RPS Compliance

Most of the renewable energy used for RPS compliance so far has been from wind energy. A separate estimate from LBNL indicated that as much as 88% of new capacity motivated by state RPSs between 1998 and 2012 was wind. As the figure above clearly illustrates, total U.S. generation very closely tracks the total amount of RPS-compliant renewable energy between 2001 and 2013.

This high level of wind generation is not necessarily surprising, even though wind capacity was limited as recently as ten years ago.  Even then, there was significant ongoing research and large deployments in Europe helping the industry reach large-scale commercial viability.

Perhaps more critically, the federal production tax credit made wind generation even more cost competitive in the mid-2000’s.  Nationwide average prices for wind capacity installed between 2002 and 2011 ranged between the mid-$30’s/MWh and the upper-$60’s/MWh. Compared to prevailing wholesale electricity prices at the time, these were cost competitive levels. Without the tax credit, wind prices would have been around $20-23/MWh more expensive in all years.

Generation-weighted average levelized wind PPA prices by PPA execution date and region

Wind power prices rise in mid-2000's then fall

Source: LBNL

In effect, state RPSs and federal tax incentives should be seen as complementary policies. Federal tax incentives made it very inexpensive for states to meet RPS mandates with wind energy, helping encourage the adoption of new and more stringent renewable policies. These state policies then drove significant state economic benefits, strengthening the argument for continued tax credit support.

As a quick side note, the price of wind power purchase agreements have been falling since 2009, reaching as low as an average $23.50/MWh in 2014. This is important as it indicates that wind may remain cost competitive with low-cost natural gas resulting from the shale revolution, particularly with most recent renewal of the wind production tax credit.

Although wind has been the primary RPS-compliant generation source historically, existing state RPS policies have also benefitted solar energy. Many state renewable mandates have specific provisions (or carve-outs) intended to directly benefit solar and/or distributed generation. The form of these provisions varies significantly.

For example, in Colorado, solar located in cooperatives or municipal utility service areas receive a 3X multiplier for the state RPS. Meanwhile, Massachusetts’ RPS contains a specific target of 1,600 MW of solar PV in its RPS. These solar provisions have played notable roles in driving initial solar market growth in many states.

Annual RPS Benefits Outweigh Costs

The economic benefits of renewable standards are significant. A recent joint study by two federal energy laboratories (LBNL and NREL) found that in 2013 renewables used for RPS compliance:

  • Supported nearly 200,000 US jobs
  • Drove $20 billion in US GDP
  • Reduced national energy prices by $1.3 to $4.9 billion
  • Reduced life-cycle greenhouse gas emissions by 59 million metric tons CO2e
  • Delivered $2.6 to $9.9 billion in health and environmental benefits
  • Reduced power sector water withdrawals and consumption by 2%, with especially large benefits in drought stricken Texas and California

In particular, the direct economic impacts were a principal cause behind the recent decisions to extend both the federal wind and solar tax credits. RPS and federal tax credits continue to be mutually reinforcing, complementary policies.

Perhaps more importantly, state RPSs and federal tax credits have driven significant cost innovation in both the wind and solar industries. Long term, renewable energy will continue to grow, bringing in greater economic and environmental benefits at lower (and potentially negative) costs.

Further, renewable portfolio standards have come at relatively little cost. State renewable standards have rather limited cost impacts, as demonstrated by yet another joint NREL and LBNL study.

Estimated Incremental RPS Costs

Costs of complying with RPS standards generally less than 2%

Source: LBNL and NREL

In most states, incremental compliance costs for existing standards through 2012 was generally at or below 2% of average retail rates. Even if existing standards are implemented fully, rates are expected to increase by less than 5% in most states, while delivering even greater economic and environmental benefits.

For more information:

  1. A little out-of-date compared to more recent national lab reports, but very good compilation of many of the issues discussed in this article:
  2. Discussion of how renewables (and RPSs) could play into the Clean Power Plan:
  3. Provides a good high-level overview of many of the issues raised by RPS policies:
  4. To learn more about specific RPS policies in your state:

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